Canola exports seen moving slower than expected

CNS Canada –– Sales of canola out of the world’s top canola-exporting country are moving slower than merchants had anticipated — and market watchers attribute Canada’s sluggish pace to high prices and low global demand.

“The export story right now is quiet,” said Peter Schutz, canola merchant at Richardson International, attributing it to a lack of demand and poor crush margins.

The crush margin for the nearby November contract works out to $38.73, as of Friday, compared with $87.96 in the same time frame the year prior, according to ICE Futures Canada’s Canola Board Crush Margin.

Export interest has tapered off lately due to high prices, said Ken Ball, trader at PI Financial.

Canola futures in the November contract closed Monday at $468 per tonne.

“Buyers aren’t going to be eager to pay that price for canola,” Ball said. “It’s a little bit too expensive.”

Schutz said China has backed away from the market slightly, despite subsidy changes within the country.

China has taken away price support to canola-growing farmers; however, those changes came after this year’s crops were planted.

That means heightened exports to China likely won’t occur until next year.

Adding to the presently grim outlook for canola exports, Australian crop bureau ABARES has bumped up its estimates for the country’s export pace and reduced its forecast for Canada.

ABARES expects Australian exports to increase by 143,000 tonnes to 2.32 million tonnes — though that number is still at a four-year low.

According to Agriculture and Agri-Food Canada, this year’s exports will be around 7.6 million tonnes, as of July, compared with 9.2 million the year prior.

Schutz said there is a chance Australia could meet needs price-wise that Canada can’t — but only if the country’s crop makes it through El Nino’s final stages.

Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow her at @jade_markus on Twitter.

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